Swedish clothing giant Hennes & Mauritz AB’s Rs 700-crore investment proposal to open 50 stores across the country is likely to be taken up by the Foreign Investment Promotion Board (FIPB) under the finance ministry in its next meeting scheduled for October 18, even as the government is awaiting a response from the company on sourcing and brand licensing rules.
Apparently, the top management of H&M, as the brand is popularly referred to, has had a series of meetings with department of industrial policy and promotion (DIPP) officials in the ministry of commerce and industry in the past couple of months.
“They are expected to respond in the next couple of days. It might come up in the next FIPB meeting,” a senior DIPP official told Business Standard.
H&M, endorsed by the likes of supermodel Gisele Bundchen and footballer David Beckham, has also roped in EY (formerly Ernst & Young) for firming up its India strategy, the official said.
DIPP seeks clarifications
After DIPP gives the proposal its green signal, the application will be formally moved to FIPB, which will then take it up for consideration under the chairmanship of Arvind Mayaram, secretary, economic affairs department.
The company had made an application to enter the Indian market in April.
Since then, the proposal has been gathering dust in various closets of the government.
It is only now that DIPP has sought some clarifications from them on adherence to the single brand foreign direct investment (FDI) norms of the country.
Second from Sweden
According to the policy, foreign retailers investing more than 51 per cent can open outlets across the country on the condition that 30 per cent of their sourced sales come from small to medium-sized domestic producers.
This is the second such proposal from Sweden and also the second largest.
Earlier this year, the Cabinet Committee on Economic Affairs had cleared furniture-maker IKEA’s Rs 10,500-crore proposal, again a leading brand from Sweden but registered in the Netherlands.
The Stockholm-based iconic fashion brand, H&M, has decided to initially invest euro 100 million through a wholly owned subsidiary of the brand owner.
Karl-Johan Persson, chief executive of H&M, had met commerce and industry minister Anand Sharma in February, following which the company made the proposal to invest in India.
“We will start with a few stores when we enter and we will see if everything as we hope then we will expand heavily from there.
“I do think that we offer something new to the Indian market in terms of fashion, and quality and great prices. Hopefully, we will get a good reception. What we gain from Indian consumers, there seems to be a great interest in fashion,” Persson had said then.
